Exhibit 4.1


 


KAPSTONE PAPER AND PACKAGING
CORPORATION


 


2009 EMPLOYEE STOCK PURCHASE PLAN


 


WITNESSETH:


 


WHEREAS,
KapStone Paper and Packaging Corporation (the “Company”) desires to provide
eligible employees of the Company and its subsidiaries interest in the Company
through the purchase of shares of common stock of the Company (“Common Stock”);
and


 


WHEREAS,
the Company desires to offer inducement to eligible employees to remain as
employees by providing a plan for the purchase of Common Stock at a discounted
rate,


 


NOW,
THEREFORE, the Company hereby establishes this Employee Stock Purchase Plan
(the “Plan”) pursuant to the provisions of Section 423 of the Internal
Revenue Code of 1986, as amended, as follows:


 


ARTICLE I


 


ESTABLISHMENT OF PLAN


 


The
Plan is hereby established effective as of the later of January 1, 2010 or
the date the registration of the Common Stock to be issued hereunder is
declared effective by the Securities and Exchange Commission; provided,
however, that this Plan shall not become effective unless it has received the
approval of the holders of a majority of the issued and outstanding Common
Stock of the Company who are either present or represented and entitled to vote
at a meeting of shareholders of the Company duly held within twelve (12) months
after the date the Plan is adopted by the Board of Directors of the Company.


 


ARTICLE II


 


DEFINITIONS AND CONSTRUCTION


 


Section 2.01.        Definitions. When the
initial letter of a word or phrase is capitalized, the meaning of such word or
phrase shall be as follows:


 


(a)           “Account”
means one or more bookkeeping accounts where a recording of each Participant’s
interest in the Plan, consisting of the sum of the Participant’s payroll
deductions under the Plan and the number of shares of Common Stock purchased by
the Participant, all of which shall be maintained by the Custodian.  Each Account shall be in the name of the
Participant only.


 


(b)           “Act”
means the Securities Exchange Act of 1934, as amended.


 


(c)           “Board
of Directors” means the board of directors of the Company as it
shall exist from time to time.


 


(d)           “Code”
means the Internal Revenue Code of 1986, as amended or any subsequently enacted
federal revenue law, as well as any regulations duly promulgated thereunder.


 


(e)           “Committee”
means the Compensation Committee of the Board of Directors, provided that, if
any member of the Committee does not qualify as both an outside director for
purposes of Code Section 162(m) and a non-employee director for
purposes of Rule 16b-3 of the Act, the remaining members of the Committee
(but not less than two members) shall be constituted as a subcommittee of the
Committee to act as the Committee for purposes of the Plan.


 

















 


(f)            “Common
Stock” means the shares of Common Stock, $0.0001 par value per
share, of the Company.


 


(g)           “Company”
means KapStone Paper and Packaging Corporation, a Delaware corporation, and its
successors (by merger, consolidation or otherwise) and assigns.


 


(h)           “Compensation”
means all compensation paid by the Company or any subsidiary to an employee
through their respective payroll systems for services as an employee, including
wages or salary, paid time off and approved absence pay, but excluding overtime
payments, incentive compensation, bonuses, profit sharing payments, stock
incentive program payments, severance payments and all fringe benefit payments.


 


(i)            “Custodian”
means any party designated by the Committee or Plan Administrator pursuant to Section 7.02
to act as custodian of the Plan.


 


(j)            “Effective
Date” means the effective date of this Plan, which is the later of January 1,
2010 or the date the registration of shares of Common Stock to be issued
hereunder with the Securities and Exchange Commission is declared effective.


 


(k)           “Eligible
Employee” means any person residing in the United States who is
employed by the Company or any of its subsidiaries on the Offering Date (as
designated by the Committee or Plan Administrator) except for:


 


(i)            employees whose customary
employment is twenty (20) hours or less per week or less than five months in a
calendar year; or


 


(ii)           any officer of the Company who is
also a “highly compensated employee” within the meaning of the Code Section 414(q).


 


(l)            “Fair
Market Value” means (a) the closing price on any national
securities exchange on which the Common Stock is listed or (b) the average
of the closing bid and asked prices in the over-the-counter-market, whichever
is applicable, as published in The Wall Street Journal, or if not so
listed, the price reasonably determined by the Committee or Plan Administrator
in accordance with Treasury Regulation Section 20.2031-2. If no sales of
Common Stock were made on such a day, the price of the Common Stock for
purposes of clauses (a) and (b) above shall be the reported
price for the next preceding day on which sales were made.


 


(m)          “Offering
Date” means each January 1 and July 1, or the first
business day thereafter on which Common Stock is offered for purchase hereunder
and/or such other 


 


date
or dates selected by the Committee or Plan Administrator from time to time on
which Common Stock is offered for purchase hereunder (with Fair Market Value
determined on such date or, if not quoted on such date, on the next succeeding
thereto on which Fair Market Value is quoted).


 


(n)           “Participant”
means an Eligible Employee who (i) authorizes the Company to make payroll
deductions from Compensation for the purpose of purchasing Common Stock
pursuant to the Plan, (ii) has commenced participation in the Plan
pursuant to Section 3.01, and (iii) has not incurred a withdrawal, voluntary
or involuntary, pursuant to Article VI.


 


(o)           “Payday”
means the date on which an Eligible Employee receives any Compensation.


 


(p)           “Plan”
means this KapStone Paper and Packaging Corporation 2009 Employee Stock
Purchase Plan.


 


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(q)           “Plan
Administrator” means one or more individuals to whom authority
is delegated by the Committee to administer the Plan.


 


(r)            “Plan
Term” means the period from the Effective Date to and including December 31,
2019.


 


(s)           “Purchase
Date” means each of June 30 and December 31 during the
Plan Term on which Fair Market Value can be determined and on which Common
Stock is acquired hereunder and/or such other date or dates selected by the
Committee or Plan Administrator from time to time on which Common Stock is
acquired hereunder (with Fair Market Value determined on such date or, if not
quoted on such date, on the last day prior thereto on which Fair Market Value
is quoted).


 


(t)            “Purchase
Price” means the price per share of Common Stock for purchase by
Participants as defined in Section 5.02.


 


(u)           “Section,”
when not preceded by the word “Code,” means a section of this Plan.


 


Section 2.02.        Construction and Governing Law.


 


(a)           This Plan shall be construed,
enforced and administered and the validity thereof determined in accordance
with the Code and the regulations thereunder, and in accordance with the laws
of the State of Delaware when such laws are not inconsistent with the Code.


 


(b)           This Plan is intended to qualify as
an employee stock purchase plan under Code Section 423 and the regulations
thereunder.  The provisions of the Plan
shall be construed so as to fulfill this intention.


 


ARTICLE III


 


PARTICIPATION


 


Section 3.01.        Participation. Any person who
is an Eligible Employee as of any Offering Date under this Plan may become a
Participant in this Plan beginning on such Offering Date by completing and
delivering to the Committee or Plan Administrator such enrollment agreement,
whether in written or electronic form, as the Committee or Plan Administrator
shall require to authorize payroll deductions and to request participation in
this Plan no later than five (5) days prior to such Offering Date or such
other deadline as may be prescribed by the Committee or Plan Administrator.


 


Section 3.02.        Payroll Deductions.


 


(a)           Payroll deductions for a Participant
shall commence on the first Payday after the Offering Date when the Eligible
Employee becomes a Participant and shall continue thereafter until the earlier
of (i) the termination of this Plan, as provided in Section 8.02, or (ii) the
date the Participant suspends his or her payroll deductions pursuant to
paragraph (b) of this Section 3.02. 
Each Participant shall authorize his or her employer to make deductions
from Participant’s Compensation on each Payday during such time as he or she is
a Participant in the Plan at whole percentage rates from 1% through 15% of the
Participant’s Compensation.


 


(b)           A Participant may not increase his or
her payroll deduction but may decrease his or her payroll deduction no more
than three (3) times between Offering Dates during participation effective
as of the Payday following delivery of notice, whether in written or electronic
form, to the Committee or Plan Administrator, or as soon as administratively
reasonable thereafter.  If a Participant,
on any scheduled Payday, shall receive no pay or his or her net pay shall be


 


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insufficient,
after all required deductions, to permit withholding the payroll deduction in
full as authorized hereunder and in the enrollment agreement, the Company or
its subsidiary shall (i) if the pay is insufficient for any deduction
hereunder, suspend the deduction until the next Payday in which Participant’s
net pay is sufficient for such withholding, or (ii) if the pay is
insufficient for a full deduction hereunder, effect a partial deduction equal
to the net pay available for such deduction; provided, however, that no
withdrawal shall be deemed to have occurred in either event.  If no deduction or if a partial deduction is
effected, no carryover of the balance of the authorized deduction shall occur.


 


Section 3.03.        Participant’s Account. On each
Payday, the Company or its subsidiary, as the case may be, shall deduct the authorized
amount from each Participant’s Compensation and, as soon as administratively
reasonable, shall report the amount of such deductions to the Custodian.  The Custodian shall credit the Account of
each Participant with the amount of the Participant’s payroll deduction under
the Plan effective as of the Payday on which it was deducted.  Interest shall not be paid on amounts held in
a Participant’s Account.


 


ARTICLE IV


 


COMMON STOCK


 


The
shares subject to issuance under this Plan shall be Common Stock.  The total number of shares of Common Stock
which may be purchased under this Plan shall not exceed in the aggregate five
hundred thousand (500,000) shares of Common Stock during the Plan Term, except
as such numbers of shares of Common Stock shall be or have been adjusted in
accordance with Section 8.01 of this Plan. 
In the event the aggregate number of shares of Common Stock issuable
shall exceed in the aggregate five hundred thousand (500,000) shares of Common
Stock (adjusted pursuant to Section 8.01 of the Plan), the Committee or
Plan Administrator shall reduce proportionately each Participant’s purchase
hereunder to the extent necessary so that the aggregate number of shares of
Common Stock will not exceed the number of authorized shares, allocated proportionately
based on Participant contributions for the Purchase Date during which the
number of authorized shares is exceeded and if any such reduction results in
cash credited to a Participant’s Account, such cash shall be refunded to the
Participant as soon as administratively practical.  Common Stock required to satisfy purchases
pursuant to the Plan shall be provided out of the Company’s authorized and
unissued shares or treasury shares or acquired by the Company in open market
transactions or private transactions.  If
shares of Common Stock are purchased in one or more transactions on the open
market or in private transactions at the direction of the Committee or Plan
Administrator, the Company will pay the difference between the Purchase Price
and the price at which such shares are purchased for Participants.


 


ARTICLE V


 


PURCHASE AND SALE OF COMMON STOCK


 


Section 5.01.        The Offering.
Notwithstanding any provision in this Plan to the contrary:


 


(a)           a Participant may not purchase Common
Stock hereunder to the extent that, after such purchase, the Participant would
own (or be considered to own) of record or beneficially shares in the Company
possessing five percent (5%) or more of the total combined voting power or
value of all classes of shares of the Company, within the meaning of Code Section 423(b)(3);


 


(b)           no Participant may be granted rights
to purchase Common Stock under this Plan which accrue at a rate that exceeds
Twenty Five Thousand Dollars ($25,000) of Fair Market Value of shares of Common
Stock (determined at the Offering Date) for each calendar year during which
such a right to purchase Common Stock is outstanding, as provided in Code Section 423(b)(8);
and


 


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(c)           the maximum number of shares of Common
Stock which may be purchased by any Participant on a Purchase Date shall be
3,000 shares, except that this maximum number of shares shall be adjusted upon
the occurrence of an event described in Section 8.01.


 


Section 5.02.        Purchase Price. The “Purchase
Price” for Common Stock purchased shall be equal to 95% of the Fair Market
Value per share of the Common Stock on the Purchase Date.


 


Section 5.03.        Purchase of Common Stock;
Limitations.


 


(a)           Within five (5) days following
each Purchase Date during the Plan Term, the Committee or Plan Administrator
shall determine the Purchase Price per share of Common Stock in accordance with
Section 5.02 herein.  Each
Participant shall thereupon automatically purchase from the Company and the
Company shall cause to be issued to the Participant, as promptly as
administratively possible, that number of whole shares of Common Stock which
such Participant’s Account shall enable such Participant to purchase at the
Purchase Price.  Irrespective of the
actual date of purchase, the date of purchase of Common Stock hereunder shall
be deemed the Purchase Date.  All shares
purchased shall be maintained by the Custodian in the Account for each
Participant.


 


(b)           All cash dividends paid with respect
to shares of the Common Stock held in the Account shall be added to the
Participant’s Account and shall be used to purchase shares of Common Stock at
the next Purchase Date.  Expenses
incurred in the purchase of such shares shall be paid by the Company.  All dividends distributed in-kind with
respect to Common Stock held in the Account shall be added to the shares held
for a Participant in his or her Account. 
Any distribution of shares with respect to shares of Common Stock held
for a Participant in his or her Account shall be added to the shares of Common
Stock held for a Participant in his or her Account.


 


(c)           A Participant shall have no interest
in or rights as a shareholder with respect to Common Stock under this Plan
until such shares of Common Stock have been issued to the Participant.


 


(d)           Any balance remaining in an employee’s
payroll deduction account following the purchase of shares of Common Stock will
be automatically refunded to the employee, except that any balance which is
less than the purchase price of one share of Common Stock will be carried
forward to the employee’s Account, except that if the employee requests a
refund of the residual, in accordance with procedures established by the
Committee or Plan Administrator, or if the employee terminates his or her
employment, the balance shall then be refunded.


 


Section 5.04.        Sale of Common Stock. Unless
otherwise prohibited by law or policy of the Company, a Participant shall have
the right at any time to direct that any shares of Common Stock in his or her
Account be sold and that the proceeds, less expenses of sale, be remitted to
him or her.


 


ARTICLE VI


 


WITHDRAWAL FROM PARTICIPATION


 


Section 6.01.        Voluntary Withdrawal. A Participant
may withdraw from participation in the Plan at any time.  A Participant’s withdrawal shall be effective
as of the Payday following delivery of notice, whether in written or electronic
form, to the Committee or Plan Administrator, or as soon as administratively
reasonable thereafter.  The Committee or
Plan Administrator shall notify the Custodian of the withdrawal of any
Participant.  As soon as administratively
reasonable after the effective date of a Participant’s withdrawal from the
Plan, the cash balance of the Participant’s Account shall be paid to him or her
in cash.  No partial withdrawals are permitted.  Any Eligible Employee who withdraws from the
Plan


 


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shall
be entitled to resume payroll deductions and become a Participant only after
compliance with Section 3.01.


 


Section 6.02.        Involuntary Withdrawal. Upon
termination of a Participant’s employment with the Company or its subsidiaries
for any reason, including resignation, discharge (with or without cause),
disability or retirement, the cash balance of the Participant’s Account shall
be paid to the Participant and the shares of Common Stock held in the
Participant’s Account shall be remitted to the Participant, or, in the case of
the Participant’s death, to the Participant’s beneficiary as provided in Section 6.04.  The Company or the Custodian shall pay such
amount as soon as administratively reasonable after the Committee or Plan
Administrator has received notification of such termination of employment.


 


Section 6.03.        Interest. No payroll
deductions or Account balances paid to a Participant, or paid to any
beneficiary in accordance with Section 6.04, shall be credited with
interest.


 


Section 6.04.        Participant’s
Beneficiary.


 


(a)           A Participant may file with the
Committee or Plan Administrator a designation of a beneficiary who is to
receive any Common Stock or cash credited to the Participant’s Account under
this Plan in the event of the Participant’s death.  Such designation of beneficiary may be
changed by the Participant at any time by notice to the Committee or Plan
Administrator, whether in written or electronic form, as approved by the
Committee or Plan Administrator.


 


(b)           Upon the death of a Participant, and
on receipt by the Committee or Plan Administrator of reasonable proof of the
identity and existence of the Participant’s designated beneficiary, the
Committee or Plan Administrator shall cause delivery of the shares or cash as
provided in Section 6.04(a), if any, to such beneficiary as soon as
administratively reasonable.  If a
Participant dies without a surviving designated beneficiary, the Committee or
Plan Administrator shall cause delivery of such shares or cash to the estate or
a representative of the estate of the Participant.


 


(c)           No designated beneficiary and no heir
or beneficiary of the estate of a deceased Participant shall acquire any
interest in the Common Stock or cash credited to the Participant’s Account
under this Plan prior to the death of the Participant.


 


ARTICLE VII


 


PLAN ADMINISTRATION


 


Section 7.01.        Administrative Committee.


 


(a)           The Plan shall be administered, at
the expense of the Company, by the Committee, except that the Committee may
appoint one or more individuals to comprise the Plan Administrator which will
have the authority of the Committee in all Plan administrative matters.


 


(b)           The Committee or Plan Administrator
shall be vested with full authority to take any and all actions necessary to
implement this Plan and to interpret this Plan and make, administer and
interpret such rules and regulations as it deems necessary to administer
the Plan.  Any determination,
construction, interpretation, administration, or application of the Plan by the
Committee or Plan Administrator shall be final, conclusive and binding on all
Participants, beneficiaries and any and all other persons claiming under or
through any Participant.


 


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(c)           Service on the Committee shall
constitute service as a director of the Company so that members of the
Committee shall be entitled to such indemnification and reimbursement as
directors of the Company as provided in its Articles of Incorporation and/or
Bylaws.


 


Section 7.02.        Custodian.


 


(a)           The Committee or Plan Administrator,
in its sole discretion, may appoint a Custodian.  The Custodian may be removed by the Committee
or Plan Administrator at any time.


 


(b)           The Custodian shall keep or cause to
be kept accurate and detailed bookkeeping accounts of all contributions,
receipts, disbursements and transfers of cash and shares of Common Stock under
the Plan, and all bookkeeping accounts, books and records relating thereto
shall be open to inspection and audit at all reasonable times by any person
designated by the Board of Directors, the Committee or Plan Administrator.


 


(c)           The expenses of the Custodian shall
be borne by the Company.


 


Section 7.03.        Transferability. Neither
payroll deductions credited to a Participant’s Account nor any rights with
regard to the purchase or receipt of Common Stock under this Plan may be
assigned, transferred, pledged or otherwise disposed of in any way by the
Participant, except with respect to the death of the Participant as provided in
Sections 6.02 and 6.04.  Any such
attempted assignment, transfer, pledge, or other disposition shall be without
effect, except that the Committee or Plan Administrator, in its sole discretion,
may treat such act as an election to withdraw from the Plan in accordance with Section 6.01.


 


Section 7.04.        Separate Accounting for
Payroll Deductions. All funds received or held by the Company
under this Plan may be used for the Company’s general corporate purposes, and
the Company shall not be obligated to segregate such payroll deductions.


 


Section 7.05.        Only Employees Eligible
To Participate. Notwithstanding any other provision of the Plan, to
be eligible to purchase Common Stock hereunder as of a Purchase Date, a
Participant must remain an employee at all times from the Offering Date through
such Purchase Date.


 


Section 7.06.        Equal Rights and
Privileges. Notwithstanding any other provision of the Plan,
all Eligible Employees shall have the same rights and privileges under the
Plan, as required by Code Section 423 and the regulations thereunder, and
the Committee or Plan Administrator shall administer the Plan and interpret and
apply the provisions of the Plan accordingly.


 


ARTICLE VIII


 


AMENDMENT AND TERMINATION


 


Section 8.01.        Adjustment of Stock. In the event
of any change after the Effective Date in the outstanding shares of the Company
by reason of any reorganization, recapitalization, stock split, stock dividend,
combination of shares, exchange of shares, merger or consolidation,
liquidation, or any other change after the effective date of the Plan in the
nature of the Common Stock of the Company, the Committee or Plan Administrator
shall make a corresponding adjustment in the number and kind of shares reserved
under this Plan, and in the purchase price and the number and kind of shares
covered by outstanding purchase commitments under this Plan as determined by
the Committee or Plan Administrator.  Any
determination by the Committee or Plan Administrator hereunder shall be
conclusive, final and binding on all persons. 
If the Company is a party to a consolidation or a merger in which the
Company is not the surviving corporation, a transaction that results in the
acquisition of substantially all of the Company’s outstanding stock by a single
person or group, or a sale or transfer of substantially all of the


 


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Company’s
assets, the Committee or Plan Administrator may take such actions with respect
to this Plan as the Committee deems appropriate.


 


Section 8.02.        Amendment and
Termination.


 


(a)           The Board of Directors may from time
to time, alter, amend, suspend, or terminate this Plan in any way; provided,
however, that if this Plan is terminated the effective date of termination
shall be immediately after the next Purchase Date; provided further, that the
Board of Directors may not, without approval by the holders of the issued and
outstanding shares of Common Stock:


 


(i)            increase the maximum number of shares
of Common Stock which may be issued under this Plan (other than to reflect
adjustment permitted under Section 8.01 hereof);


 


(ii)           change the class of shares which may
be issued under this Plan;


 


(iii)          change the designation of the persons
or class of persons eligible to participate and receive Common Stock under this
Plan; or


 


(iv)          change the provision of Section 5.02
concerning the Purchase Price,


 


(b)           Unless earlier terminated by the
Board of Directors pursuant to paragraph (a) of this Section 8.02, this
Plan will terminate on the earlier of: (i) the last day of the Plan Term,
or (ii) the date on which the authorized remaining Common Stock reserved
for this Plan are not sufficient to enable each Participant on such date to
purchase at least one share of Common Stock. 
No purchases of Common Stock shall be made after the termination of this
Plan.


 


ARTICLE IX


 


MISCELLANEOUS


 


Section 9.01.        Notices. All notices or
other communications by a Participant to the Committee or Plan Administrator
under or in connection with the Plan shall be deemed to have been duly given
when received by the Secretary of the Board of Directors of the Company or when
received in the form and at the location or by the person specified by the
Committee or Plan Administrator.  Any notices
or other communications by the Committee or Plan Administrator to a Participant
under or in connection with this Plan shall be deemed to have been duly given
when mailed by the Committee or Plan Administrator to the most recent address
of the Participant on the business records of the Company.


 


Section 9.02.        No Right To Continued
Employment. Neither enrollment in the Plan, the purchase of
Common Stock hereunder, nor participation otherwise in the Plan shall be deemed
to give any employee the right to be retained in the employ of the Company or
of its subsidiaries or to interfere with the right of the Company or the
subsidiary to discharge any employee at any time.


 


Section 9.03.        Notice of Sale.  As a condition of participation in this Plan,
each Participant agrees to notify the Company if he or she sells or otherwise
disposes of any of his or her shares of Common Stock purchased pursuant to this
Plan within two years of the Offering Date on which such shares were offered or
within one year of the Purchase Date on which such shares were purchased.  Notwithstanding anything herein to the
contrary, the Company (or employer) shall have the right to satisfy any
obligations to withhold taxes incurred by reason of the issuance and/or sale of
Common Stock hereunder


 


Section 9.04.        Governmental Regulations.  The Company shall have no
obligation to sell and deliver shares of Common Stock under this Plan
unless and until (i) it has taken all actions required to register the
shares of Common Stock under the Securities Act of 1933; (ii) any
applicable listing


 


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requirement of any stock
exchange (to the extent the Common Stock is then so listed or quoted) for the
Common Stock is met; and (iii) all other applicable provisions of state
and federal law have been satisfied.


 


 


	
   

  	
  Adopted
  by the Board of Directors

  
	
   

  	
  On
  October 1, 2009

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Approved
  by the shareholders

  
	
   

  	
  on
                              ,
  2010

  



 


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